The Finger Lakes region of New York State attracts tourists who wish to sample its superb wines. In recent years, hog-raising farms-some with more than a thousand hogs-have taken root in the region. The smells emanating from the massive amounts of pig manure adversely affect the tourism. "Wine and swine, in other words, do not mix" [Chen, 2001, p. Ll].

Imagine that the Little Pigs (LP) hog farm is situated near the Tipsy vineyard. The following table shows, for each level of LP's output, the marginal cost of a hog, the marginal benefit to LP, and the marginal damage done to Tipsy:

a. How many hogs does LP produce?

b. What is the efficient number of hogs?

c. The owner of LP gets tired of Tipsy's complaints about her hog farm, and she buys out Tipsy. After the merger, how many hogs does LP produce?

d. How does the merger affect the sum of the profits eamed by LP and Tipsy?

Transcribed Image Text:

Output 1 23456 MD 57